Oil rebounds above $76 on bargain hunting

Oil rebounds above $76 on bargain hunting

Singapore: Oil rebounded above $76 a barrel on Friday on bargain hunting, recovering from the steepest three-day decline since mid-May after support at $75 held.

Asia stocks also edged higher while the dollar slipped, as markets across the board paused after sharp declines on fears that economic growth across the world is faltering.

“It’s just a rebound. The main factors that drive the market are still stocks and forex," Yusuke Seta, commodity sales manager at Newedge Japan said.

Oil remained supported at $75 despite the fall from the 4 August high at $82.97, Seta said.

US crude for September delivery rose 60 cents to $76.34 by 0245 GMT, after a 7% fall in the past three days that took prices to their lowest since 19 July.

London Brent crude was up 45 cents at $75.97 a barrel.

A further rise to $77.20 for US crude is possible, with both the wave pattern and RSI indicator suggesting a possible completion of the sharp decline, according to Reuters analyst Wang Tao.

Econ woes still weigh

Also providing some support for oil was a fall for the dollar, off 0.25% on Friday at 82.431 after rising 0.4% on Thursday.

However, the market is likely to stay cautious given that a slew of US indicators such as consumer price data as well as July retail sales, and Germany’s second-quarter GDP growth will be released later on Friday.

Tokyo-based Mizuho Securities trader Ryuichi Sato said the oil price rebound is likely to be temporary given that the economic outlook remained weak and the peak gasoline demand season in the US is about to end.

“The market remains cautious about the downside," he said.

Germany’s economy is likely to slow sharply in the third quarter and grow sluggishly next year as stimulus measures expire and budget cuts kick in, a Reuters poll of economists showed on Wednesday.

This may weaken the euro against the US dollar and reduce appetite for dollar-denominated oil in Europe, Newedge’s Seta said.

While fundamentals are still relatively weak, the hurricane season may provide some upside, he added.